New Jersey

The Bottom Line

Least Tax-Friendly

Income tax rates for Garden State residents are relatively low compared with some other tax-unfriendly states. They checked in as the third-lowest in our survey for states with a broad-based income tax. (There’s also a payroll tax in Newark.) But while New Jersey gives residents a break on income taxes, it brings the hammer down when they buy a home. New Jersey’s property taxes are the highest in the U.S. The state-wide average property tax on a $400,000 home in New Jersey comes to a whopping $10,120.

As any East Coast traveler can tell you, New Jersey is no longer a place where you can hop off an exit and buy cheap gas. At 41.4 cents per gallon, the state’s gas tax is now the 11th-highest in the country. New Jersey is one of Kiplinger’s top ten least tax-friendly states.

Sales Tax

6.625% state levy. That rate is cut in half (3.313%) for in-person sales in designated Urban Enterprise Zones located in disadvantaged areas. Salem County, which borders no-tax Delaware, also charges the reduced 3.313% rate. Notably, motor vehicles are charged at the regular rate in these locations. Most clothing and footwear are tax-exempt year round throughout the state.

Income Tax Range

Low: 1.4% (on up to $20,000 of taxable income)

High: 10.75% (on taxable income over $5,000,000).

Effective tax rate: 1.53% for single filers, 3.37% for joint filers

New Jersey allows localities to impose an income tax; the average levy is 0.5%, per the Tax Foundation.

Motor Fuel Taxes

Gasoline: $0.4140 per gallon.
Diesel: $0.4850 per gallon.

Property Taxes

In New Jersey, residents pay an average of $2,530 in taxes per $100,000 of assessed home value.

Vehicle Taxes

Sales tax is due on purchases.

Sin Taxes

Cigarettes: $2.70 per packMoist snuff: $0.75 per ounceOther tobacco products: 30% of the wholesale priceVapor products: for closed systems, $0.10 per milliliter; for open systems, 10% of the wholesale sales price

Taxes On Wireless Service

8.95%

Inheritance and Estate Taxes

New Jersey imposes an inheritance tax ranging from 11% to 16% on inherited property with a value of $500 or more. The amount of tax due is based on who specifically receives the property and how much the property is worth.

The decedent's spouse; children, grandchildren, etc.; parents, grandparents, etc.; mutually acknowledged children; and stepchildren (but not step-grandchild or their descendants) do not have to pay the tax. The first $25,000 of property inherited by the decedent's sibling, son-in-law or daughter-in-law) is exempt as well. After that, they must pay the inheritance tax at rates ranging from 11% to 16%. All other individual heirs pay a 15% tax on the first $700,000 of inherited property and a 16% tax on everything over $700,000.

Oddball Tax

Want to own a plush or fuel-thirsty ride? That’ll cost you extra in the Garden State. A 0.4% surcharge is levied on cars that cost more than $45,000 or have an cobined EPA fuel-mileage average of 19 or below.